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Enjoy five top tips and more to help your business navigate tax time.
Disclaimer: Kordis provides end-to-end accounting and financial services. This article is based on the experiences of Kordis staff. Kordis is not a tax consultant and does not provide tax advice as a registered tax consultancy.
Annually, the IRS collects millions of dollars in taxes from small businesses across the US, plus any associated fines and penalties. While we loathe paying taxes, we do it for our country, state, and local communities. However, fines are a different matter altogether.
Good accounting helps your small business taxes at year-end and limits your exposure to unnecessary fines or penalties.
Most small businesses use a calendar tax year to track their taxes. Alternatively, if your business is big enough and you prefer not to end your 12-month accounting cycle to end in December, you can choose a fiscal tax year. Speak with a professional or visit the IRS website.
Depending on your business structure, you may need to pay federal, state, and local taxes. Knowing which taxes and when will help avoid fines, penalties, and other levies.
Your business structure determines what federal taxes you must pay, how to pay, and when to pay. There are various structures, including sole proprietorship, partnership, LLC, and various corporation options.
There are also different types of business taxes, including income tax, self-employment tax, estimated tax, employer tax, and excise tax. Seek the advice of a lawyer, tax consultant, and accounting expert (such as those at Kordis) for more information.
State and local tax laws vary by location and business structure. Check with state and local officials to know your tax obligations. The most common considerations are:
While taxes are the realm for wizards and taxation consultants, an experienced accounting professional will ensure that your books are balanced and compliant, keeping issues to a minimum.
Choosing the right structure for your business can impact your tax liabilities. Learn more about how your business structure influences your taxes in our article on how to file business taxes.
Guy Fieri's Triple D has nothing on us. The team at Kordis has put together five Triple Ts to help with your taxation tribulations:
Depending on your business structure, industry, employee situation, and location, you must submit forms and make payments at specific times. Most accounting software can remind you what to do and when.
QuickBooks, Zenoti, Square, and Shopify integrate seamlessly with the Kordis Reporting Platform, ensuring that all taxes are properly recorded, reported, and projected.
You cannot guess your tax bill. If the IRS believes you were negligent or overly careless, they can apply a penalty. If the IRS finds that you intentionally tried to defraud them, the fine can be as high as 75% of the money you owe, plus you might face criminal charges.
An end-to-end accounting service will eliminate bookkeeping errors, so any mistakes made will be due to your fishy guesstimations.
The IRS is very strict with separating business and personal expenses. For tax purposes, only business-related expenses are deducted from your income.
Leaving everything to year-end almost guarantees problems. Keeping your income and expenditure up-to-date not only helps with your cash flow management but also helps with your tax obligations. Accounting software and the integrated Kordis Reporting platform can forecast future tax obligations.
The IRS expects you to file deductions. However, record deductions correctly, and ensure they are proportional to your income. American Express has a list to get you started, and there is a handy IRS Publication 535 to help you navigate deductions. Alternatively, speak with an end-to-end accounting and financial service such as Kordis.
Once you’ve filed your taxes, maintaining compliance is crucial to avoid future issues.
If the IRS contacts you, respond promptly and provide the necessary documentation. At Kordis, we assist businesses with audits to ensure compliance and minimize disruptions.
Good record-keeping is essential. Keep receipts, invoices, and bank statements for at least three years. For more on staying compliant, explore our article on how long does VAT tax refund take.
Understanding taxation is complex. As a small business owner, your focus should be on sales, customers, expenditure, and staffing rather than the minutiae of your taxes.
Keeping your books balanced and compliant is an advantage at tax time. Reach out to a Kordis expert today about our services for startups and SMBs across the US.
Speak with a Kordis expert today.